𝐙𝐀𝐓𝐂𝐀 𝐒𝐞𝐥𝐟-𝐁𝐢𝐥𝐥𝐞𝐝 𝐈𝐧𝐯𝐨𝐢𝐜𝐞

𝐙𝐀𝐓𝐂𝐀 𝐒𝐞𝐥𝐟-𝐁𝐢𝐥𝐥𝐞𝐝 𝐈𝐧𝐯𝐨𝐢𝐜𝐞

A self-billed invoice is a type of invoice where the buyer (the recipient of the goods or services) issues the invoice to the seller. This arrangement is typically used in specific scenarios, such as when the buyer is responsible for calculating VAT and issuing the invoice for the seller.

In a self-billed invoice system, the buyer must:

1. Agree with the seller on the arrangement.
2. Ensure that the correct VAT treatment is applied (either standard VAT, zero-rated VAT, or exempt).
3. Report the transaction correctly to ZATCA using the Fatoorah system, in line with electronic invoicing regulations.

Self-Billed invoice used when,

• Long-term Supply Contracts: When goods or services are delivered over an extended period, such as ongoing supply contracts, and the buyer handles the invoicing for administrative convenience.
• Bulk Purchases: For large or bulk orders where invoicing might be cumbersome for the seller to manage individually.
• Subscription-based Services: In cases where services are provided on a recurring basis, and the buyer prefers to handle invoicing on behalf of the seller.

Key Considerations for ZATCA Self-Billed Invoices:-

• Self-Billing Agreement: There must be an agreement between the buyer and seller regarding the self-billing arrangement. Both parties must be aware of and agree to the terms, including who is responsible for issuing invoices.
• VAT Reporting: The VAT on the self-billed invoice must be reported accurately to ZATCA via the Fatoorah system. The buyer, in this case, will be responsible for ensuring that VAT is calculated, reported, and paid correctly.
• Seller’s Approval: The seller must approve the self-billing arrangement and provide the buyer with permission to issue invoices on their behalf. The seller should also ensure that the self-billed invoice complies with Saudi VAT regulations.
• Documentation: Both the buyer and the seller must keep records of all self-billed invoices for at least five years in accordance with Saudi tax laws, in case of future audits by ZATCA.

Calculating VAT on Self Billed Invoice: -

Tech Solutions Ltd., a Saudi Arabia-registered company, has entered into a sales agreement with Global Electronics Co., also registered in Saudi Arabia, for the purchase of 100 laptops. Each unit is priced at SAR 3,500, and the transaction is subject to the standard 15% VAT applicable to domestic sales. Under the agreed self-billing arrangement, Global Electronics Co. will issue invoices on behalf of Tech Solutions Ltd.

• Total Value of Goods = Quantity × Unit Price
• Total Value of Goods = 100 × 3,500 = 350,000 SAR
• VAT Amount = Total Value of Goods × VAT Rate
• VAT Amount = 350,000 × 15% = 52,500 SAR
• Total Invoice Amount = 350,000 + 52,500 = 402,500 SAR